Spain To Introduce Hurdles For New Expats

European nationals trying to relocate to Spain for more than three months will now have to prove they won't be a financial burden

London, UK (Pryce Warner International) August 1st, 2012 - A new ministerial order stating that any EU citizen living in Spain for more than three months will have to produce a job contract or documents confirming they have enough money to support themselves, has now been introduced.

In situations where individuals will not be employed, they will have to prove that they are covered by health insurance.  This new law potentially affects thousands of potential Expats, as Spain is one of the most popular retirement locations in Europe.

The Spanish government has justified the measures by pointing to Article 7 of the 2004 EU directive on free movement, which gives EU member states the power to define it ‘without prejudice to national border controls’ which means that entry conditions can be imposed on other EU citizens by member governments.

Under EU law, citizens of member states are entitled to receive health care in any member country. But Spanish authorities say their finances are being drained by this arrangement and they are hoping to save €1bn a year by changing this law.

It is presently not clear what the exact impact of this will be on present Expats. Current EU directives state that those living in member states for more than three months should not become an ‘unreasonable burden on social services’.

Spain is also taking an increasingly hard line again tax evaders. The Hacienda, Spain’s tax authority, is routinely investigating any form of foreign investments or overseas pension income.

Peter Howarth, who runs a tax consultancy, commented: "A number of clients have reported receiving letters about their offshore bank accounts. It is the first time we have seen the Hacienda using information supplied by a tax haven to pursue tax on undeclared income.  The Hacienda has also sent enquiries based on information received from other OECD tax authorities.  This might affect both residents who have offshore accounts and those who are claiming non-residence but have told their bank they live in Spain."

Anyone with undeclared assets should take advantage of the current Spanish tax amnesty that runs until the end of November 2012 and allows people to avoid criminal penalties by paying a nominal 10% tax rate.

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By Aneil Fatania
Financial Editor
Pryce Warner International Group
For any corrections of factual information contained within our news items please contact our editor.
Email: af@prycewarner.com
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